Owner Of Pennsylvania Medical Staffing Company Sentenced For Billing Medicaid for Services Not Provided, Provided by Others or Not Qualified to Provide Services

Medical staffing companies need to be careful when billing for services and for providers. One issue that arises is when a licensed provider is not available and the services are provided by a different person or someone who is not licensed yet. 

We have seen this with home health agencies as well. Companies must be very careful about controls on who performs services in staffing agencies. A recent staffing company case shows what can happen when there are shortcuts and false documentation. The case can go criminal.

On December 21, 2016, Rose Umana, owner and operator of Vision Healthcare Services, Inc. (Vision) of Pennsylvania, was sentenced by United States District Court Judge Sylvia H. Rambo to 36 months in prison. Vision is a medical staffing company and home care services provider servicing several Pennsylvania counties and has been enrolled under Medicaid since 2006. This sentence was for making false statements relating to health care matters, engaging in monetary transactions involving criminally-derived property, and identity theft.  

According to the United States Attorney's Office, between January 2012 and January 2014, Ms. Umana, in her position as owner of Vision, created false identification documents and fictitious occupational licenses for workers. It is also alleged that Ms. Umana and Vision: 
(1) submitted bills to Medicaid for medical services not provided by the workers, 
(2) billed Medicaid for services provided by someone other than the person claimed to be the provider, and 
(3) billed Medicaid for services not provided or provided by someone not qualified to provide the service.

Teva Pharmaceutical Enters Into Deferred Prosecution Agreement And Agrees to Pay More Than $283 Million in Fines For Paying Government Officials in Various Countries to Promote Drugs and Paying Doctors in Mexico to Prescribe Its Drugs

What's the difference between the way the government treats large or public healthcare businesses and medium to small sized businesses when it comes to violating regulations? Plenty.

Well, to begin with, large businesses have the ability to pay huge fines, employ thousands and the government tends to not want them to fail. A recent case involving Teva would have been very different if it were a small or medium sized business.

Deferred prosecution agreements (DPA), for example, are almost impossible to obtain with small to medium size health care businesses. When clients note that large businesses do these same practices, they must remember that being so large gives them benefits as well. In a recent case, Teva obtained a DPA showing that being a large publicly owned company has its benefits. A DPA usually requires a strict compliance program and reporting to the government but it allows the entity to avoid criminal plea which would shut down a business engaged in healthcare in the United States. 

On December 22, 2016, Teva Pharmaceutical Industries Ltd. (Teva), the world’s largest manufacturer of generic pharmaceutical products, and its wholly-owned Russian subsidiary, Teva LLC (Teva Russia), agreed to resolve criminal charges and to pay a criminal penalty of more than $283 million in connection with allegations involving the bribery of government officials in Russia, Ukraine and Mexico in violation of the Foreign Corrupt Practices Act (FCPA) in order to promote its drug products.

We often have clients at early stages who offer to pay back any billings at issue. Those overtures are rejected since local offices for small or medium sized businesses want the criminal conviction and usually want to pursue the owners or executives and not the entity.

New York Doctor Charged With Taking Kickbacks In Test-Referral Arrangement With Clinical Lab. Huge Case With 27 Doctors Pleading Guilty.

Federal health care fraud cases involving payments for referrals are getting larger, involving more health care providers and get prosecuted in phases. One case in New York how these cases keep coming out of the same investigation. 

On December 20, 2016, Thomas V. Savino, M.D., a doctor practicing in Staten Island, New York, was charged with accepting payments (bribes) in exchange for test referrals as part of a long-running marketing arrangement operated by Biodiagnostic Laboratory Services LLC (BLS) of New Jersey. He is the 30th physician charged who referred cases to BLS. 

The cases arising out of BLS' operations is believed to be the largest number of medical professionals ever prosecuted in a kickback case. The investigation has thus far resulted in 41 guilty pleas – 27 of them from doctors – in connection with the marketing and kickback arrangements. Some of these were alleged sham lease, service and consulting agreements. On June 28, 2016, BLS, which is no longer operational, pleaded guilty and was required to forfeit all of its assets. The investigation has to date recovered more than $12 million through forfeiture. 

This case went to Indictment after Dr. Savino did not voluntarily plead guilty.  According to the indictment, from July 2012 through April 2013, Dr. Savino allegedly received cash payments totaling at least $25,000 from BLS employees and associates. Dr. Savino’s referrals allegedly generated approximately $375,000 in lab business for BLS. The government is charging that the inducements were for Medicare and private insurance.

The sales representatives for BLS often used other entities to make payments. The government also alleges in many of these cases that the patients were never informed that the cases were referred to a laboratory where the physician would receive a payment.

Houston Psychiatrist Sentenced to Long Sentence (144 Months) in Prison for Role in False Claims for Mental Health Treatment and Partial Hospitalization Program

When physicians refer or admit patients to a hospital or outpatient program, if there is deemed to be a lack of medical necessity or fraud, the physician can be held liable on conspiracy theory for the full amount of the billings and face a sentence far greater than ever imagined. When there is marketing to the patients that compounds the issues.

A recent case shows how a psychiatrist, Sharon Iglehart, M.D. a former attending psychiatrist at Riverside General Hospital (Riverside) of Houston, received a lengthy sentence (144 months) even though she is a first time offender after going to trial. 

It also shows how sentences vary case by case and judge by judge. Further, the sentences one defendant receives in a multi-defendant case is strongly affected by co-defendants' sentences.

After a 7-day trial in September 2015, Dr. Iglehart was convicted by the jury of one count of conspiracy to commit health care fraud, one count of health care fraud and three counts of making false statements relating to health care matters. 

In April 2016, Dr. Iglehart was sentenced by U.S. District Judge Ewing Werlein Jr. of the Southern District of Texas to a very heavy 144 months in prison for her role in the case. Judge Werlein also ordered Dr. Iglehart to pay $6,363,528.82 in restitution and to forfeit the same amount. The government alleged that there was a total of $158 million in Medicare billings related to her conduct. 

Connecticut Office Manager Pleads Guilty to Health Care Fraud Charges for Billing for Psychotherapy Services Using Social Worker's Provider Number Who Did Not Provide Services

Mental health audits and prosecutions are on the rise in “behavioral health” which includes a wide variety of health care providers who provide care on an outpatient basis. These providers include psychiatrists, psychologists, licensed clinical social workers, licensed marriage and family therapists, licensed professional counselors, and licensed alcohol and drug counselors.  

Managers are often charged in health care fraud cases and a recent case relates to a manager's alleged participation in fraud and abuse in outpatient behavioral health. On December 14, 2016, office manager Maurice Sharpe of Connecticut waived his right to indictment and pleaded guilty before U.S. District Judge Bolden to one count of health care fraud. The facts relate to billing for psychotherapy services provided by unlicensed individuals, using another provider's Medicaid number or billing for services not provided. 

Florida Man Indicted for Receiving $20 Million in Marketing Fees From Compounding Pharmacy For Patients Covered by Tricare Health Insurance and Paying Telemedicine Companies to Prescribe Compounded Medication Prescriptions

Compounding pharmacies are facing investigations for marketing arrangements, drug misbranding as well as for health care fraud in billing workers' compensation insurance or Tricare health insurance. A recent case involves billings to Tricare, commission payments and the use of telemedicine in order to have providers issue the prescriptions. 

On December 13, 2016, Monty Ray Grow of Tampa, Florida was charged by Indictment which alleges that between September 2014 and June 2015, Mr. Grow received approximately $20 million in payments from a Broward County, Florida compounding pharmacy in exchange for recruiting and referring patients that were covered by the Tricare health care insurance program. The government alleges that these payments were "kickbacks." An Indictment is merely an accusation and every defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

The Indictment further alleges that Mr. Grow and others defrauded Tricare by paying telemedicine companies to provide compounded medication prescriptions to the recruited patients without conducting any physical examination of the patients as required by law. It is also alleged that these invalid prescriptions were issued without regard to the patients’ medical necessity.  The Indictment further alleges that Mr. Grow used the proeeds to buy real estate, luxury vehicles and securities.    

The time period here was key for Tricare which was to adopt new controls on compounded medication prescriptions in May 2015. The year before there was aggressive marketing of military families who were cold called about compounded medications. In 2004 Tricare paid $5 million for compounded medications but in the fist 3 months of 2015 alone, Tricare was billed at least $700 million. This is by all providers and it shows part of the reason Tricare became aggressive about compounding. The marketing of compounding medications directly to patients was aggressive across the country and this case is the first of more to come against compounding pharmacies, physicians and marketers.

Eyeland Optical Centers Settles Civil False Medicaid Claims Case For Billing for More Than 4 Lenses Per Year and Not Self Reporting

On December 6, 2016, Eyeland Optical Centers, a chain of eye care centers in Pennsylvania settled allegations under the False Claims Act with the U.S. Attorney's Office.  

The settlement resolves allegations that Eyeland had billed Medicaid for more than four lenses per year, in violation of Pennsylvania’s Medicaid regulations, and retained those payments even once it became aware that it had done so. This type of billing happens when patients lose glasses or break them but there are limits on what state programs pay for in order to avoid abuse.

The self-reporting rules in the OIG's Civil Monetary Penalties (CMP) Law are beginning to be enforced more aggressively.  The CMP law requires that overpayments must be reported and returned within sixty days of the date that the overpayment was identified or that a related cost report was due (whichever is later). The default penalty for this type of violation is $10,000 per item or service. 

In addition, computerized or "big" data is being used to identify billing irregularities or violation of billing rules. This case shows how this failure to self-report was used as evidence in the false claims case and how easy it was for the government to use big data to identify billing for services not allowed. Eyeland has agreed to pay $135,328.56 to resolve these claims.  

Posted by Tracy Green, Esq.

Green and Associates, Attorneys at Law
Office: 213-233-2260
Email: tgreen@greenassoc.com

Unlicensed Michigan Physician Who Saw Patients at Home Under Other Doctors' Names for 8 Years Pleads Guilty to Conspiracy to Commit Wire Fraud for Role in Billing Medicare Over $6 Million

Home visits must follow the same rules as billing at a physician's office. In addition, in certain clinics we have seen an increase in offices using foreign doctors not licensed in the U.S. to help with the workload and where services gradually creep into the unlicensed practice of medicine.

A recent case shows what happens when unlicensed personnel bill for services under another physician's name. On December 9, 2016, Renald Dasine, an unlicensed Michigan physician, pleaded guilty to one count of conspiracy to commit wire fraud before U.S. District Judge John Corbett O’Meara of the Eastern District of Michigan.  Sentencing has been scheduled for March 8, 2017. 

As part of his guilty plea, Mr. Dasine admitted that in connection with his employment at a Detroit in-home physician services company known as B and M Visiting Doctors PLC, he submitted fraudulent claims to Medicare from 2005 to 2013. Mr. Dasine admitted he saw patients and falsified related patient records, including medical documents, prescriptions for controlled substances and billing documents, all under the name of a licensed medical doctor. 

Three other unlicensed individuals, Cecil Alexander Kent, Charles McRae and Alvin Williams, previously pleaded guilty for their involvement in the B and M Visiting Doctors PLC billing for services provided by unlicensed individuals. They were indicted back in 2013 which shows how long these cases take to resolve. B and M allegedly billed Medicare approximately $6.3 million during this 8 year time period. 

Attorney Commentary: Ancillary personnel can be very useful in making a medical practice run smoothly and profitably. The key is to ensure that where licensed personnel are required to do their services that the unlicensed personnel do not perform those services or do anything that will be billed to insurance or federal or state health care plans.

Posted by Tracy Green, Esq.
Green and Associates, Attorneys at Law
Phone: 213-233-2260
Email: tgreen@greenassoc.com

Owner Of New Jersey Mobile Diagnostic Testing Facility Sued For Submitting Claims To Medicare for Cardiologist Who Was on Pre-Payment Review

A recent federal criminal and civil qui tam case relate to a Medicare provider billing for services provided by another provider who was on pre-payment review. 

Pre-payment review is also called "paper billing" and is ostensibly designed to ensure that doctors or providers submit claims within established rules and regulations, and which required them to submit documentation, including medical records, to support the services being billed to Medicare. 

Under pre-payment review, claims for reimbursement that do not have the documentation necessary to support the services being billed are rejected by the Medicare contractor. When a provider is placed on pre-payment review, it is often the death knell for a health care business since collections grind to a halt and often legitimate claims are denied or rejected for arbitrary reasons. It used to be used to train providers but it is now often used as a way to shut down a provider's Medicare practice.

In this recent case, a cardiologist decided to find a way around the pre-payment review limitations which brought this civil case and a criminal case. On December 6, 2016, Vijay Patel of New Jersey, and his business Mobile Diagnostic Testing of NJ LLC were named in a civil federal qui tam lawsuit for allegedly knowingly submitting false claims to Medicare for thousands of diagnostic testing services they did not render.  

The civil complaint alleges that Vijay Patel had an associate who was a cardiologist and also a Medicare provider. It is alleged that from around 2009 through 2012, the cardiologist was on “pre-payment review.”  What happened is that instead of the cardiologist submitting the claims, from August 2011 through December 2012, Mr. Patel's entity and his brother's entity (Biosound Medical Services Inc. ) submitted the cardiologist's claims as if these entities had performed them instead of the cardiologist. 

New Jersey Woman Pleads Guilty to Role In Medicare Fraud by Clinical Laboratory Billing for Genetic DNA Testing on Seniors Where Healthcare Providers Were Paid for Authorizations

Fraud prosecutions in clinical laboratories are on the rise. Marketing is usually at the heart of these cases. A recent case involving DNA testing shows marketing issues on the patient side and on the referring or authorizing physician side as well as issues of medical necessity. 

One of the reasons that paying outside marketers commissions creates issues is that the health care provider often does not know how the marketer finds the patients or accounts. This case shows how creative outside marketers can be in finding patients and health care providers to earn commissions. 

On December 1, 2016, Sheila Kahl of New Jersey pleaded guilty before U.S. District Judge Anne E. Thompson in Trenton federal court to an information charging her with one count of conspiring to commit health care fraud and one count of conspiring to wrongfully access individually identifiable health information and pay illegal remunerations to health care professionals. Sentencing for Ms. Kahl is scheduled for March 14, 2017.

Ms. Kahl's actions involved an entity known as The Good Samaritans of America which the government alleged was not a true not-for-profit and was a marketing company front to get elderly patients to submit to genetic testing so it could get commission payments from clinical laboratories. 

According to documents filed in the case and statements made in court, from July 2014 through December 2015, Seth Rehfuss, Ms. Kahl, and others used The Good Samaritans of America to gain access to low-income senior housing complexes. Mr. Rehfuss and others claimed that The Good Samaritans of America was a “trusted non-profit” that assisted senior citizens in navigating federal benefit programs. The government alleged that The Good Samaritans of America was a front to present information about genetic testing and they used advertisements for free ice cream to ensure attendance at the presentations.

California Facilities Owned By Rideout Health to Pay Civil Monetary Penalties and Agree to 3-Year Compliance Plan to Resolve Controlled Substance Act Claims

The Drug Enforcement Administration (DEA) is becoming more aggressive about enforcing recordkeeping and other rules for controlled substances in hospitals, surgery centers, urgent care clinics and so on. We have handled audits by the DEA and fines are a significant part of their enforcement. A recent case shows what can happen to health care facilities when the recordkeeping rules are not followed. This case also shows that even with cooperation the fines can be significant.

On December 6, 2016, Rideout Health entered into a settlement agreement in which it will pay the United States $2,425,000 to settle the federal claims of alleged violations of the Controlled Substances Act including record keeping. The alleged violations were by three of Rideout Health’s facilities in Yuba and Sutter Counties: Rideout Memorial Hospital, Fremont Medical Center, and Feather River Surgery Center. There were no allegations of diversion or improper prescribing. 

This settlement arises from a DEA investigation that began after DEA received information from the California State Board of Pharmacy that Fremont Medical Center’s DEA Registration had expired, and that from October 23, 2012, to October 23, 2014, pharmacy technicians at Rideout Memorial Hospital were transporting controlled substances between Rideout Health facilities with little or no security controls in place.

In addition, Rideout Health has agreed to a three-year compliance plan. The payment and plan resolve the United States' claims that the three Rideout Health facilities failed to properly record and maintain thousands of transactions involving controlled substances in violation of the Controlled Substances Act and its implementing regulations.

The settlement also resolves the United States’ contention that the system Rideout Health used during that time to distribute controlled substances between these facilities failed to provide sufficient security controls. 

There was a lot of cooperation here once the investigation began. Rideout Health worked with the DEA and the United States Attorney’s Office to develop a detailed compliance plan to address the deficiencies in Rideout Health’s handling of controlled substances. 

Rideout Health also took proactive steps to reorganize its Compliance Department to improve controls with respect to the purchase, storage and dispensing of controlled substances. The compliance plan with the DEA is designed to advance Rideout Health’s ability to meet its record keeping requirements and enhance its ability to detect and prevent drug diversion. These are the type of actions that begin once any entity becomes aware of an investigation. Being proactive is very important and does not indicate weakness or constitute an admission of wrongdoing. It is just good practice.

Posted by Tracy Green, Esq.
Email: tgreen@greenassoc.com
Green and Associates, Attorneys at Law

Two Apparel Executives and Their Accountant Plead No Contest to Workers' Compensation Premium Fraud for Underreporting Payroll to Insurance Carriers

On December 1, 2016, two clothing manufacturing executives and their accountant pleaded no contest for their roles in underreporting workers' compensation premiums in a Case No. BA435018 prosecuted by the Healthcare Fraud Division of the Los Angeles County District Attorney’s Office. The loss amount was alleged to be $3.8 million in lost workers' compensation premiums.

The case was originally filed in 2015 with 18 counts. Sung Hyun Kim and Jae Young Kim each pleaded no contest to two counts of workers’ compensation fraud. Caroline Sung Choi entered her plea to two counts of failure to pay state payroll taxes. Ms. Choi and her sister, Sung Hyun Kim, were corporate officers for Meriko, Inc., and its successor, SF Apparel, both garment manufacturing companies that make brand jeans for other jeans companies. 

The DA's Office alleged that beginning as early as 2006, Sung Hyun Kim and Jae Young Kim, an accountant, underreported millions of dollars in payroll to insurance carriers. Losses were estimated to be roughly $3.8 million. The original allegations were that $7.8 million was underreported. Sentencing for all three individuals is set for January 24.

Attorney Commentary: In a workers' compensation premium cases, by not reporting accurate payroll figures, companies pay reduced workers’ compensation premiums when they underreport the number of employees, adjust their work categories or underreport the amounts actually paid. Sometimes this includes paying employees cash. 

We see these cases in industries where workers' compensation premiums are significant. In some industries, the premiums can be as high as 25%. The local county District Attorneys' Offices are funded by a special fund to prosecute these cases. Generally, the key to resolving these types of cases is reaching a restitution agreement with the insurance carriers. Often the goal is not to put the companies out of business. There can also be civil cases that run parallel to the criminal cases which need to be resolved. 

Workers' compensation carriers are now able to obtain the EDD reports and see what employers report to the government on payroll to see if there are any differences in what was reported to the insurance carriers. Workers' compensation carriers are also increasing the number of audits. If there are audits, it is important to obtain representation early in order to assess any issues and determine an overall strategy for the company and key officers or employees.

Posted by Tracy Green, Esq.
Green and Associates, Attorneys at Law
Phone: 213-233-2260
Email: tgreen@greenassoc.com

Hospice Care Provider Settles False Claims Lawsuit Involving Allegations that Hospice Paid Doctor for Referrals By Donating To Doctor's Charity

On December 2, 2016, Vitas Health Corporation Midwest and related entities agreed to pay $200,000 to resolve allegations that they violated the False Claims Act and the Anti-Kickback Statute by paying Dr. Farid Fata for patient referrals to its hospice care services.

In an earlier unrelated criminal matter, Dr. Fata pleaded guilty to health care fraud, conspiracy to pay and receive kickbacks and promotional money laundering, and was sentenced to a term of 45 years in prison. 

The allegations in the civil False Claims Act suit were brought to the government by a whistleblower, known as a relator, under the qui tam provisions of the False Claims Act. 

From November 2012 to January 2014, relator Rita Dubois worked at Vitas as the Director of Market Development in Southeastern Michigan. Ms. Dubois’s complaint alleged that from mid-2012 through early 2014, Vitas contributed $15,750 to the Swan For Life Cancer Foundation, which was a cancer charity that Fata established. 

In return, Fata referred 23 patients to Vitas for hospice care, the complaint alleges. The U.S. intervened in the lawsuit.  Ms. Dubois will receive $36,000 out of the $200,000 settlement for her role in filing the qui tam action.

This case was investigated jointly by the U.S. Attorney’s Office for the Eastern District of Michigan and the Department of Health and Human Services, Office of Inspector General.

Attorney Commentary: This is one of the cases where when payments are made to third parties they are deemed to be illegal referral fees. Given that Dr. Fata's criminal case seems extensive and resulted in a long sentence, this was probably a small part of the allegations in the doctor's case. The case against the hospice was not criminal, however, this qui tam case shows that payments to a doctor or his related entities must be viewed carefully and run by compliance counsel. 

The conflict of interest in donating to a doctor's charity create the appearance of payment for referrals. The payment of $200,000 is far less than the costs of trying the lawsuit and the risks of losing so it makes good business sense but it is far better to avoid such situations. 

Posted by Tracy Green, Esq.
Green and Associates, Attorneys at Law
Email: tgreen@greenassoc.com
Phone: 213-233-2260

Redondo Beach Neurologist Pleads to Overprescribing Painkillers in Los Angeles County Case

On December 1, 2016, a Redondo Beach neurologist Gerard Goryl plead guilty to selling narcotics to undercover police officers two years ago. Dr. Goryl pleaded no contest to 38 counts, including illegally prescribing a controlled substance and possession for sale of a controlled substance in Los Angeles County Case No. BA425289. 

The sentence is an example of the new felony sentencing after realignment.  Dr. Goryl is expected to receive four years in local custody (which means that he will avoid state prison and serve the time in county jail with usually 2 years in and 2 years out and get credit for half time) and three years in a lockdown mental health facility when he is sentenced on Jan. 4.

The sentence to lockdown mental health facility shows that there were other factors in this case affecting the neurologist and that he needs treatment. The case was prosecuted by the Los Angeles County District Attorney's Office, Major Narcotics Division. The case was investigated by the Redondo Beach Police Department in conjunction with the Drug Enforcement Administration. Undercover agents were key to the case.

Dr. Goryl's medical clinic in Redondo Beach was run with with his assistant Wilfred Arvizo Jr. who was charged as a co-defendant. This was an undercover operation where evidence was gathered as officers posed as patients. Over a two-month period in 2014, both men allegedly sold or prescribed hydrocodone and Xanax to undercover officers. The government alleged that the drugs were sold without any type of physical examination or medical need. Mr. Arvizo faces six similar counts and is scheduled to return to court on Jan. 19, 2017.  

Attorney Commentary on Bail Pending Trial for Physicians: One of the difficult issues in these type of cases is that as a condition of bail, the Medical Board requested that Dr. Goryl cease practicing medicine while the case was pending. Initially the judge only limited Dr. Goryl from prescribing controlled substances and surrendering DEA certificate. Some additional facts must have occurred since two months later the judge amended the order and prohibited the doctor from practicing at all while the case was pending trial. This essentially shuts down the doctor's practice for two years. 

Posted by Tracy Green, Esq.
Green and Associates, Attorneys at Law
Email: tgreen@greenassoc.com
Phone: 213-233-2260

Los Angeles Doctor Convicted After Trial of Federal ‘Structuring’ Charges for Making Cash Deposits to Avoid Federal Reporting Requirements

On November 18, 2016, Los Angeles doctor Washington Bryan II was convicted by a jury after a three-day trial of 29 counts of federal “structuring” charges for making a series of cash deposits totaling approximately $478,000 between October 2011 and January 2013. 

The government alleged that Dr. Bryan made deposits of less than $10,000 into four separate accounts for the purpose of preventing banks from reporting the deposits to the federal government, which is required for every cash transaction of more than $10,000. 

For each of the 29 counts, the Prosecution provided evidence that Dr. Bryan made cash deposits into multiple bank accounts on the same day that added up to more than $10,000. The government contended that going to two or three banks in the same day, sometimes just minutes apart, to conduct a transaction that could have been completed at one bank has no benign explanation.  In order to prove criminal intent and knowledge of the structuring laws, the government presented evidence to the jury that Dr. Bryan received a letter in 2007 from Wachovia Bank informing him of the reporting requirement and alerting him that his pattern of currency deposits at the time appeared to be violating federal law. 

Federal prosecutors presented evidence and argued that Dr. Bryan structured the cash deposits for the purpose of concealing income he received from thousands of prescriptions that he issued for narcotic painkillers and HIV medications out of his Brentwood office. If one of the cash deposits had been $10,000 or more, the bank would have filed a currency transaction report (CTR) with IRS. The government was also able to introduce evidence at trial that Dr. Bryan was disciplined by the Medical Board of California for excessively prescribing narcotic medications, including OxyContin, and place on three years of probation. The prosecution contended that cash structuring began after Bryan was placed on probation and while he continued to routinely prescribe high dosages of painkillers to patients – most of whom paid $500 in cash each time they visited Bryan’s Brentwood office and obtained prescriptions, sometimes without ever seeing the doctor.

Dr. Bryan is to be sentenced by United States District Judge R. Gary Klausner on February 27, 2017.  The statutory maximum sentence is 145 years in federal prison, however, the sentencing laws are complex and it is unlikely the sentence will be anywhere near the maximum. 

Attorney Commentary: This case shows that even if the cash was deposited in all the banks and reported to the IRS as income, a violation of the federal structuring laws may still result in a criminal case. This case appears to have been used as a means to prosecute the doctor instead of pursuing charges of violating prescribing laws. The case may have gone to trial because the plea offer made by the Prosecution was considered to be unduly harsh. In some cases, it is better to go to trial and let the evidence go before the jury and court so that the sentencing will more properly reflect the facts and evidence. Every case is different and this will result in a harsh result for the physician as well.

Posted by Tracy Green, Esq.
Green and Associates, Attorneys at Law
Email: tgreen@greenassoc.com
Phone: 213-233-2260

Nursing Home Physicians, Be Careful. Illinois Psychiatrist Pays $908,000 to Settle Civil Allegations of False Billing for Evaluation and Management Services. 10 Year OIG Exclusion Part of Settlement.

On November 8, 2016,  a Springfield psychiatrist, Duttala Obul Reddy, settled allegations of false billing for services provided to nursing home residents in central Illinois.  The false claims lawsuit filed by the government alleged that from January 2008 through February 2013, Dr. Reddy allegedly submitted bills for evaluation and management services provided at long-term care facilities that either had not been provided or had not been provided to the extent claimed. 

Under the terms of the settlement agreement, Dr. Reddy denies the allegations that he submitted or caused submission of false claims for payment under Medicare and Medicaid for medical services. The terms of the settlement required Dr. Reddy to pay $908,000 and to agreed to his exclusion from participation in Medicare, Medicaid and all other federal health care programs for a period of 10 years. The settlement had the U.S. District Judge Myerscough enter judgment in favor of the government and against Dr. Reddy.

Attorney Commentary: Physicians who work at nursing homes are held to the same standards as private practitioners in billing. This particular psychiatrist had issues with the state licensing board due to alleged boundary violations and that may have triggered these audits. While nursing home visits may result in billing on a regular schedule, it is critical for doctors to ensure that visits are only billed if they occurred and to be very careful to avoid upcoding. The type of OIG exclusion that occurred in this case can be detrimental to a career given the pervasiveness of government funding of health care in hospitals, nursing homes and insurance.

Posted by Tracy Green, Esq.
Green and Associates, Attorneys at Law
Email: tgreen@greenassoc.com
Phone: 213-233-2260

Ohio Psychiatrist Sentenced to Prison for Tax Evasion in Filing False Tax Returns. Lesson: Do Not Wait Till Things Go This Far - Get Help

On November 21, 2016 an Oregon, Ohio psychiatrist was sentenced to serve 18 months in prison in the U.S. District Court for the Northern District of Ohio for tax evasion. 

According to court records, from as early as 2005, Dr. Sandra Vonderembse failed to pay taxes and filed and caused to be filed with the Internal Revenue Service (IRS) false and fraudulent tax returns that included false statements regarding her income and the amount of tax due and owing. 

Why did this case go criminal? It is the false statements that get the "tax evasion" count rather than the lesser non-fraud offense of "subscribing false tax returns."  Additionally, from 2009 through 2011, Dr. Vonderembse falsely claimed to have no taxable income and to owe no taxes, despite earning more than $240,000 each year while working as a psychiatrist. It is due to Dr. Vonderembse allegedly using nominee entities to conceal income from the IRS, and sending fake financial instruments to the IRS in purported payment of her taxes.  

New Jersey OB/GYN Settles Civil Allegations on Pelvic Floor Therapy Claims, Pays $5.25 Million and Agrees to 20-Year OIG Exclusion

On November 15, 2016, a New Jersey OB/GYN, Labib Riachi, agreed to be excluded from participation in Federal health care programs, including Medicare and Medicaid, for 20 years to settle allegations by the U.S. Department of Health and Human Services, Office of Inspector General (OIG), that Dr. Riachi submitted thousands of claims for Pelvic Floor Therapy (PFT) to Medicare and Medicaid for services that were either never provided or were otherwise false or fraudulent. 

Dr. Riachi's exclusion follows a Qui Tam or False Claims Act (FCA) settlement agreement with the U.S. Attorney's Office for the District of New Jersey for false billing. On February 12, 2016, Dr. Riachi agreed to resolve his FCA liability for $5.25 million. In resolving this matter through settlement, Dr. Riachi has denied any liability.

California Occupational Therapist Pleads Guilty to Medicare Fraud Conspiracy. Case Lesson: Danger of Medical Providers Working With Management Companies

On October 24, 2016, a licensed occupational therapist Keith Canlapan pleaded guilty in Los Angeles for his role in a $2.6 million Medicare fraud scheme that involved billing for occupational therapy services that were not provided. The plea was to one count of conspiracy to commit health care fraud before U.S. District Judge George H. Wu of the Central District of California.  Sentencing is scheduled for Feb. 16, 2017, before Judge Wu. 

As part of his guilty plea, Mr. Canlapan admitted that he was a licensed occupational therapist employed with JH Physical Therapy, an occupational therapy clinic located in Walnut, California.  Mr. Canlapan further admitted that through JH Physical Therapy, he billed Medicare for occupational therapy services when no such services were provided to the Medicare beneficiaries.  Instead, the Medicare beneficiaries received massage and acupuncture services, which are not reimbursable under Medicare rules, he admitted.  In fact, on dates that Mr. Canlapan purportedly provided occupational services to Medicare beneficiaries at JH Physical Therapy, Canlapan was admittedly not present at JH Physical and instead was either out of the country or at his other places of employment on some of those dates. 

Between approximately October 2009 and approximately December 2012, Mr. Canlapan, through JH Physical Therapy, admitted in his plea that he billed Medicare $2,669,618 in false and fraudulent claims, of which Medicare paid $1,860,786.

Mr. Canlapan was charged in an indictment returned on June 16, 2016, along with co-defendants Simon Hong, 54, and Grace Hong, 50, husband and wife, both of Brea, California.  Simon Hong is the owner and Grace Hong is the co-operator of JH Physical Therapy, and they are charged with one count of conspiracy to commit health care fraud and three counts of health care fraud.  Both are pending trial, which is scheduled for Jan. 17, 2017.  An indictment is merely an allegation and all defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

Attorney Commentary on Management Companies and Patients' Requests for Therapy:

This case is a lesson on what happens when a licensed health care worker goes to work for a management company which helps the occupational therapist (in this case) obtain a Medicare provider number and then does the billing and essentially runs the practice.

California Man Who Refinanced Hotel Property Convicted Of Wire Fraud and Misstatements to a Bank in Federal Jury Trial

In the legal community, many of us expected white collar prosecutions for bank financing and mortgage fraud, including cases against lenders to be on the rise. There have not been as many cases as expected. The cases still seem to be against individuals who gave false information to get a loan. While some call these "liar's loans" - most frequently they are not prosecuted unless the borrower was not able to make the loan payments. A recent case involving hotel refinancing and construction loans show what kind of bank misstatement and loan fraud cases go criminal. In the cases we have worked on, the banks put together a large package of material to make it easy for the prosecutors to work up the case.

On November 9, 2016, after a 12 day trial, a federal jury convicted Sanjiv Kakkar of wire fraud and making misstatements to a bank. The government presented evidence at trial that Mr. Kakkar presented false information to a bank in connection with refinancing a hotel property he owned in Boulder Creek, Calif. There were three basic categories of misstatements or fraud: (1) falsifying income information and tax returns where income was overstated; (2) failure to provide updated financial and tax records; and (3) submitting false information to an escrow company to get reimbursement for construction costs.  

WakeMed Pays Penalties for Non-Employed Medical Director Fees. Learn From Their Experience.

Smaller hospitals and surgery centers often use medical director fees. One concern is that there is often not a great deal of effort into determining whether these medical director fees violate the bans on physician self referrals. Each case is different, howver, one case to review is a recent one involving WakeMed Health and Hospitals in North Carolina. OIG alleged that WakeMed paid remuneration to one non-employed medical director in the form of medical director fees.

After WakeMed disclosed conduct to OIG pursuant to its Corporate Integrity Agreement about payment of medical director fees, it agreed on October 26, 2016, to pay $146,235.38 for allegedly violating the Civil Monetary Penalties Law provisions applicable to physician self-referrals and kickbacks. 

Before your facility considers whether it should pay a directorship fee or whether as a physician or provider you should receive one, ensure that you have obtained a true legal opinion as to why that payment meets the safe harbor and is within federal and state laws and regulations.

Posted by Tracy Green, Esq.

Green and Associates, Attorneys at Law

Email: tgreen@greenassoc.com

Office: 213-233-2261

CleanSlate Addiction Treatment Centers Settle Qui Tam Allegations of Prescribing of Suboxone by Nurse Practitioners and Physician Assistants Without Proper Physician Supervision and Improper Billing

The addiction industry is facing a great deal of scrutiny at every level. The laws and regulations are changing and compliance is lagging behind. Noble efforts to get patients treated quickly for substance abuse due to the growing opioid abuse epidemic will cause problems if the federal and state laws are not followed carefully especially where Suboxone and other scheduled drugs are involved (due to potential for misuse and diversion). Further, where there is Medicare/Medicaid or insurance billing involved issues of medical necessity, proper billing and proper medical supervision is key.

Treatment centers need to be mindful that federal rules and regulations regarding prescribing and billing must be followed carefully. A recent qui tam case addresses the prescribing of Buprenorphine (Suboxone), a Schedule III controlled substance that also can be used to treat pain, by mid-level practitioners and what happens when federal law changes but state regulations are not adopted. Providers must follow state and federal laws and regulations.  

How did this qui tam case come about? Until recently, only a physician could prescribe buprenorphine for addiction treatment. Congress modified the law in July 2016, allowing nurse practitioners and physician assistants to prescribe buprenorphine for addiction treatment, provided they meet certain training and state-law licensing requirements.  In Massachusetts, those requirements have not yet been established.

A recent case shows the legal issues. On November 22, 2016, the U.S. Attorney’s Office in Boston reached a $750,000 civil settlement yesterday with CleanSlate Centers, Inc. and Total Wellness Centers, LLC d/b/a CleanSlate. This civil settlement resolved allegations that the two companies, which together operate opioid addiction treatment centers in Massachusetts and other states, improperly prescribed buprenorphine (Suboxone®) for opioid addiction treatment and improperly billed Medicare.

California Doctor Sentenced to Probation for Removing Artifacts and Archeological Resources From Federal Parks After Significant Cooperation and Payment of Restitution

U.S. Park Service Photo of someone who tried to take petroglyph 

Federal regulations govern wildlife, national parks, endangered species, and we have seen individuals get felony charges for violating these laws and regulations while they pursue their hobbies. 

One of our cases years ago involved a physician who obtained fish from PennySaver and local shops and took care of them in his own home tanks -- but it turned out the fish was on an endangered species list and he was not aware of it. We were able to stop any consequence to the physician's license but the licensing boards are stricter now. A recent case involving a physician shows how a hobby or interest can lead to federal charges and a conviction.

On November 11, 2016, Dr. Jonathan Cornelius Bourne of Mammoth Lakes was sentenced to two years of probation, a $40,000 fine, and $249,372 in restitution for felony violations of the Archeological Resources Protection Act. Additionally, Dr. Bourne is banned from entering federal public lands for recreational purposes while on probation. This sentence follows his guilty plea on August 15, 2016, to unauthorized transportation of archeological resources and unauthorized excavation, removal, damage, or defacement of archeological resources.